Dollars and Sense: Is This the Right Time to Refinance Your Mortgage?

September 10, 2012

Over the past several months, the mortgage interest rates have dropped to the lowest they ever have been in history. It's anybody's guess if they will continue to drop, but you might be wondering, is it time to consider refinancing?

Refinancing is "...the process of paying off one loan with the proceeds from a new loan, using the same property as collateral," according to Inside Mortgage Finance.
A refinance does not pay off your debt; however, it restructures the debt, either at a lower interest rate or a different term. When you pay off your existing mortgage, you create a new one.

Is refinancing right for you? For starters, it is important to know your goals. Why do you want to refinance? Here are the reasons why people generally refinance their homes.

Get a great rate: If the current interest rates are lower than the interest rate on your loan, it may be a good time to refinance. This will enable you to pay less money over the life of the loan.

Increase cash flow: Refinancing your mortgage may extend the repayment period of your loan, and thus, lower your monthly payments and increase your cash flow. This may also allow you to pay out less money each month, ...

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